Brady Construction Company contracted to build an apartment complex for a price
ID: 2539260 • Letter: B
Question
Brady Construction Company contracted to build an apartment complex for a price of $6,400,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,640
2,550
1,320
3,870
1,320
—
2
1,640
1,320
2,960
3,870
2,960
—
3
1,640
2,550
2,720
3,870
2,620
—
4
640
3,140
1,280
4,480
945
—
5
640
3,140
2,280
4,480
2,620
—
6
640
3,140
3,200
5,955
2,960
—
Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)
Gross Profit (Loss) Recognized
Revenue Recognized over Time Revenue Recognized Upon Completion
Situation
2018
2019
2020
2018
2019
2020
1
264900
411887
213213
0
0
890000
2
264900
-24900
240000
0
0
480000
3
264900
4
5
6
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,640
2,550
1,320
3,870
1,320
—
2
1,640
1,320
2,960
3,870
2,960
—
3
1,640
2,550
2,720
3,870
2,620
—
4
640
3,140
1,280
4,480
945
—
5
640
3,140
2,280
4,480
2,620
—
6
640
3,140
3,200
5,955
2,960
—
Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)
Gross Profit (Loss) Recognized
Revenue Recognized over Time Revenue Recognized Upon Completion
Situation
2018
2019
2020
2018
2019
2020
1
264900
411887
213213
0
0
890000
2
264900
-24900
240000
0
0
480000
3
264900
4
5
6
Explanation / Answer
Statement Showing Gross Profit/Loss Recognized ( $ in 000) Revenue Recognized Over time Revenue Recognized Upon Completion Situation 2018 2019 2020 2018 2019 2020 1 264.900 411.887 213.212 890.000 2 264.900 (24.900) 240.000 480.000 3 264.900 (674.900) (100.000) (410.000) (510.000) 4 160.000 1,180.000 - 1,340.000 5 160.000 (160.000) 340.000 340.000 6 (195.000) (145.000) (240.000) (195.000) (340.000) (775.000) Revenue Recognized in 2018 ($in 000) Situation Cost Incurred as on 2018 ( A) Estimated Cost TO Complete (B) Total Cost to be incurred (C= A+B) % of completion (D=A/C*100) Total Contract Revenue ( E) Gross Margin ( F=E-C) Gross Profit Recognized (G=F*D) 1 1,640 3,870 5,510 30 6,400 890 264.900 2 1,640 3,870 5,510 30 6,400 890 264.900 3 1,640 3,870 5,510 30 6,400 890 264.900 4 640 4,480 5,120 13 6,400 1,280 160.000 5 640 4,480 5,120 13 6,400 1,280 160.000 6 640 5,955 6,595 10 6,400 (195) (195.000) Revenue Recognized in 2019 ($in 000) Situation Cost Incurred as on 2019 ( A) Estimated Cost TO Complete (B) Total Cost to be incurred (C= A+B) % of completion (D=A/C*100) Total Contract Revenue ( E) Gross Margin ( F=E-C) Gross Profit Recognized (G=F*D) Gross Profit Already Recognized in 2018 (H) Gross Profit recognized for 2019 (I=G-H) 1 4,190 1,320 5,510 76 6,400 890 676.788 264.900 411.887 2 2,960 2,960 5,920 50 6,400 480 240.000 264.900 (24.900) 3 4,190 2,620 6,810 62 6,400 (410) (410.000) 264.900 (674.900) 4 3,780 945 4,725 80 6,400 1,675 1,340.000 160.000 1,180.000 5 3,780 2,620 6,400 59 6,400 - - 160.000 (160.000) 6 3,780 2,960 6,740 56 6,400 (340) (340.000) (195.000) (145.000) Revenue Recognized in 2020 ( $ in 000) Situation Cost Incurred as on 2020 ( A) Estimated Cost TO Complete (B) Total Cost to be incurred (C= A+B) % of completion (D=A/C*100) Total Contract Revenue ( E) Gross Margin ( F=E-C) Gross Profit Recognized (G=F*D) Gross Profit Already Recognized till 2019 (H) Gross Profit recognized for 2019 (I=G-H) 1 5,510 5,510 100 6,400 890 890.000 676.788 213.212 2 5,920 5,920 100 6,400 480 480.000 240.000 240.000 3 6,910 6,910 100 6,400 (510) (510.000) (410.000) (100.000) 4 5,060 5,060 100 6,400 1,340 1,340.000 1,340.000 - 5 6,060 6,060 100 6,400 340 340.000 - 340.000 6 6,980 6,980 100 6,400 (580) (580.000) (340.000) (240.000)
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